On an unadjusted basis, MBA said the market composite index grew 7 percent from the previous week. The refinance index jumped 10 percent from the prior week, while the seasonally adjusted purchase index fell 4 percent.

Interest rates have dropped the last two weeks, contrasting with a recent trend of rising rates since early November. The higher rates at the end of 2013 generally resulted in modest declines in weekly mortgage applications.

The average rate on 30-year fixed-rate mortgages with conforming loans dropped to 4.57 percent from 4.66 percent the prior week. Rates on 30-year fixed-rate mortgages with jumbo-loan balances slipped to 4.57 percent from 4.58percent.

The average rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration dropped to 4.24 percent from 4.29 percent.

All three rates were at their lowest levels since November 2013.

The average rate for 15-year fixed-rate mortgages declined to 3.68 percent from 3.72 percent. The 5/1 ARM average eased to 3.23 percent from 3.28 percent.